The Fed's minutes imply it will hold interest rates steady. Consumer confidence improved in August, but home-price data showed declines
Major stock indexes ended Tuesday's session mixed after the release of a range of economic data including an improvement in consumer confidence, a rise in new home sales and a drop in home prices.
Also, the Federal Reserve released minutes from its Aug. 5 meeting, giving the markets hints as to the Fed's next moves on interest rates. "Members generally anticipated that the next policy move would likely be a tightening" of rates, the minutes said, but also implied it could be quite some time before such a step is taken.
Action Economics said the minutes are "consistent with an unchanged policy stance near term, especially given current market conditions, and argue against expectations for any further easing."
U.S. consumer confidence rose to 56.9 in August, from 51.9 in July, though still well below the confidence reading of 105.6 a year ago.
U.S. new home sales rose 2.4% in July to a pace of 515,000, up from 503,000 in June. New homes on the market represent a 10.1 month supply, down from 10.7 last month. The median sales price rose to $230,700 from $230,000 last month, off 6.3% from a year ago.
Home prices continue to slide lower. The U.S. S&P Case/Shiller home price index dipped 0.5% to 167.69 in June. The index, which measures home prices in 20 cities, is off 15.92% in the past year, another record year-over-year decline. Prices in Phoenix fell 2.63% in June, while San Francisco, Miami and Las Vegas were also weak. But prices in Denver, Boston, Minneapolis and Cleveland showed strength.
"Bubble markets" such as California, Arizona and Florida, are still struggling, but home prices in some other markets are slowing their declines or even rising in price, says Michelle Meyer of Lehman Brothers. "We expect the pace of decline of national home prices to start to moderate next quarter," she wrote. "We still fell comfortable with our view that the market will not return to equilibrium until the end of next year."
Major equity indexes moved in and out of positive territory all day, but ended mixed on light pre-Labor Day volume.
On Tuesday, the Dow Jones industrial average was up 26.62 points, or 0.23%, to 11,412.87. The broader S&P 500 index gained 4.67 points, or 0.37%, to 1,271.51. The tech-heavy Nasdaq composite index lost 3.62 points, or 0.15%, to 2,341.97.
On the New York Stock Exchange, 19 stocks moved higher for every 11 in negative territory. On the Nasdaq, the ratio was 15 to 12 positive. Most stocks were bouncing back from declines on Monday, when the major market benchmarks each fell about 2% on more worries about the health of the U.S. financial system.
Oil prices rose Tuesday on worries that Hurricane Gustav may threaten oil production in the Gulf of Mexico. On the NYMEX, crude oil for October delivery was up $1.16 to $116.16 per barrel. S&P's Oil & Gas Exploration & Production industry index jumped 4% higher on the news.
The Federal Deposit Insurance Corporation, which insures bank deposits in the U.S., placed 117 banks on its "troubled" list in the second quarter, up from 90 banks at the end of the first quarter. Assets of troubled institutions totaled $78.3 billion, up from $26.3 billion.
Among stocks in the news, Darden Restaurants (DRI), the owner of Olive Garden and Red Lobster, expects same-restaurant sales to fall 1.1% in the first quarter of its 2009 fiscal year. The chain projects same-restaurant sales to be flat to up 1% for all of the year, while total sales should grow 12 to 13%. Earnings of 57 to 59 cents per share are expected in the first quarter.
The New York Times Co. (NYT) says total revenues plunged 10.1% in July. Advertising revenue plummeted 16.2%, while circulations revenues lost 0.5%.
Fannie Mae (FNM) reported its gross mortgage portfolio grew at an annual rate of 14.4% in July.
General Motors (GM) has received interest from two Gulf Arab investors that may want to buy the Hummer brand.
Hewlett-Packard Co. (HPQ) says it has completed its acquisition of Electronic Data Systems.
American-Eagle Outfitters (AEO) posted earnings of 29 cents per share in the second quarter, vs. 37 cents a year ago, as same-store sales fell 9% and total sales dropped 2%. August same-store sales are down 6% month-to-date, says the retailer, which expects earnings of 31 to 36 cents per share in the third quarter, vs. 45 cents a year ago.
Big Lots (BIG) posted earnings of 32 cents per share, vs. 21 cents a year ago, as same-store sales rose 2.8% and total sales rose 1.9%. The company raised its 2009 earnings guidance.
Rio Tinto (RTP) reported a net profit of $6.91 billion on sharply higher sales in the first half of the 2008 fiscal year. Earnings were $5.39 per share, vs. $2.51 a year before.
Smithfield Foods (SFD) reported a 9 cents per share loss last quarter, vs. earnings of 41 cents a year ago. Higher input and feed costs offset a 20% rise in revenue.
Coach (COH) announced its board authorized the buyback of up to $1 billion in shares by June 26, 2010.
Major European stock indexes were mixed Tuesday. In London, the FTSE 100 index fell 0.63% to 5,470.70. In Paris, the CAC 40 index rose 0.29% to 4,368.55. Germany's DAX index gained 0.69% to 6,340.52.
Major Asian indexes were lower. Japan's Nikkei 225 index fell 0.78% to 12,778.71. In Hong Kong, the Hang Seng index edged down 0.23% to 21,056.66.
Treasuries, which surged on Monday, barely budged on Tuesday. The ten-year note was unchanged at 101-26/32 for a yield of 3.78%, while the 30-year bond edged down 01/32 to 101-26/32 for a yield of 4.39%.